Merkel wins 2nd term

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Berlin - German voters handed conservative Chancellor Angela Merkel a second term and a chance to create new centre-right government on Sunday, while her centre-left rivals suffered a historic defeat in the national election.

Merkel succeeded in ending her "grand coalition" with the centre-left Social Democrats led by challenger Frank-Walter Steinmeier, the current foreign minister, according to television projections. She can now form a government with the pro-business Free Democrats, who performed very strongly.

"We have achieved something great," a beaming Merkel told supporters. "We have managed to achieve our election aim of a stable majority in Germany for a new government."

She vowed to hold "swift and decisive" coalition talks with the Free Democrats' leader, Guido Westerwelle, who has been widely tipped as Germany's next foreign minister.

Merkel has argued that a change of coalition was needed to ensure stronger economic growth as Germany emerges from a deep recession. In joining with the Free Democrats, she hopes to cut taxes and halt a plan to shut down Germany's nuclear power plants by 2021.

"I think that tonight we can really celebrate, but I would say that after that there is work waiting for us," Merkel told the crowd at her party's headquarters in Berlin, who chanted "Angie! Angie!"

"I would not tell anyone to remain sober, but we don't want to forget that there are many problems in our country to be solved," she added.

Centre-right majority

Projections by the nation's public broadcasters, based on early vote counts and exit polls, put support for Merkel's Christian Democrats at up to 33.8% of the vote and for the Social Democrats at 23%. The Free Democrats captured nearly 15%, the Left Party had more than 12% and the Greens were at 10% or more.

Both ARD and ZDF television channels said that would produce a stable centre-right majority in parliament. It was a major shift from the 2005 election, in which Merkel's conservatives squeaked in with 35.2% of the vote to the Social Democrats' 34.2%.

Sunday's election was the worst showing since World War II for the Social Democrats - who head into opposition after 11 years in government.

"There is no talking around it: this is a bitter defeat," a subdued Steinmeier said at the party's Berlin headquarters.

He vowed to lead a strong opposition.

"Our job in the opposition will be to very carefully pay attention to whether they can do it," he said of the incoming government.

Merkel made clear that she wants to maintain the consensual approach that has made her popular over the past four years.

"My understanding was, and my understanding is, that I want to be the chancellor of all Germans," she said.

Tax cuts

The Free Democrats have called for far deeper tax cuts than the modest middle-income tax relief Merkel has pledged. Neither has set a date for the proposed cuts, which Steinmeier's party has opposed - arguing that they were unrealistic, in view of big government debt run up to combat the global economic crisis.

The Free Democrats leader was eager to join the government.

"We are pleased with this exceptional result but we know that above all else, this means responsibility," Westerwelle told supporters.

"We are ready to take on this responsibility," he added. "We want to help govern Germany because we need to ensure that there is a fair tax system, better chances for education and that citizens' rights will finally be respected again."

Germany's three opposition parties appeared to have gained in the past four years, with all of them headed for their best results ever. In 2005, all three parties scored less than 10% of the vote each.

While the outcome on Sunday was particularly painful for the Social Democrats, Merkel's party also performed poorly. The result wasn't much better than their own worst post-war performance - 31%, in 1949.

Still, Merkel's conservatives were relaxed, seeing the surge in support for the Free Democrats as a vote for their own leader.

"Together, they're all Merkel votes," the chancellor's chief of staff, Thomas de Maiziere said of the centre-right's support.

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